TMI Blog1996 (12) TMI 95X X X X Extracts X X X X X X X X Extracts X X X X ..... the corpus of the assessee trust had been furnished by the assessee to the Assessing Officer and they were kept on record. The assessee trust filed its return of income on 30-10-1991 showing a surplus of Rs. 4,660. It further claimed deduction under section 11(2) of the I.T. Act to the extent of Rs. 40,000 and has filed Form No. 10 along with the return of income on 30-10-1991. The only reason given for accumulation is relief of poverty and it was felt very vague by the Assessing Officer. He held it to be not specific ; so also the resolution filed along with the request for accumulation does not mention the amount of accumulation or the purpose for which the accumulation was made. The Assessing Officer held that notice in Form No. 10 was intended to obtain authority and permission from the Assessing Officer for accumulating any amount and using it for specific objects in the subsequent years. Hence, in his opinion, the accumulation should be specific in purpose and also in amount. Since the purpose of accumulation in Form No. 10 is vague and not specific as also the resolution accompanying Form No. 10 does not contain any specific purpose of accumulation, the Assessing Officer he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (2) Purpose of accumulation is mentioned in the notice. (3) Period of accumulation should not exceed 10 years. (4) Money sought to be kept in accumulation is invested in one of the modes specified in section 11(5). 5. I have heard Shri F.V. Irani and Shri Dharmen B. Shah, learned counsel for the assessee, and Shri N.D. Kadam, learned Departmental Representative. The assessee filed a paper book containing 20 pages. Copy of the trust deed is provided at pages 11 to 15. It is dated 26-12-1975. This deed was produced before the Dy. Charity Commissioner, Greater Bombay, on 15-3-1976. The objects of the trust for the purpose of our present investigation are the following : " 4. The Trustees shall hold the Trust Fund and the net income thereof upon Trust utilise the same for education, medical relief, relief of poverty and for any other charitable object as the Trustees shall, in their absolute discretion deem proper. The Trustees shall be entitled to utilize the Trust Fund and its net income for all or any of these objects and in such manner as they shall in their, absolute discretion deem fit. 5(a) The Trustees shall be entitled to receive upon such terms as are consistent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... J (Mad.) 266. In para 3 of the Tribunal, the following is what is held : " 3. We are unable to agree with the revenue. A reading of section 11(2) and Form No. 10 clearly shows that the assessee is not Required under this provision to specify any particular object of the trust on the purpose for which the accumulation is proposed to be made. The only requirement under the provision is that the unspent portion of the income of the trust can be accumulated for the purpose of the trust. It is clear that the assessee has specified this requirement by enumerating in Form No. 10 the various objects of the trust. Accumulation is therefore only for the purpose of the trust and is permissible under section 11(2)." On the other hand, the learned Departmental Representative relied upon, besides Trustees of Singhania Charitable Trust s case, which is already relied upon by the DC(A), a Division Bench of the Tribunal (Bombay) reported in Colton Textiles Export Promotion Council v. First ITO [1983] 4 ITD 642. Before the Bombay Bench, it was contended, as it is now before me, that once a valid application was filed and other requirements like investment of income were met with, the ITO had no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cision in Cotton Textiles Export Promotion Council's case apply and it is only the Madras Tribunal's decision in CSI Technical Vocational Training Trust's case applies. Photo copy of the decision in CSI Technical Vocational Training Trust's case is provided to this Tribunal and is put in the record. 6. After considering these arguments advanced on both sides, I am inclined not to agree with the assessee's contentions. According to him, if out of several objects, only one object is preferred for which accumulation is sought for, it should be permitted and the Assessing Officer has no other power left except to grant it. In my humble opinion, it is not at all correct. The accumulation is sought at least for 10 years. Now, in the accounting year relevant to assessment year 1990-91, the amount of accumulation for which exemption under section 11(2) is claimed is Rs. 40,000. What is the major investment towards achieving this object of charitable purpose is not elaborated by the assessee either before the ITO or before the DC(A) or before me. Do they intend to construct choultry, dharamshala or any other item of major investment for which accumulation is necessary is not at all m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erty of the trust towards charitable objects enumerated as per its trust deed. In the absence of any such finding, at least 25% of the gross income derived by the charitable trust should be allowed as exempt under section 11(1)(a). This alternative contention was not at all met by the Departmental Representative in any successful manner in his arguments. The gross income of the assessee trust was Rs. 71,496. 25% of the same comes to Rs. 17,873. According to the assessee, at least this amount should have been granted as exempt under the provisions of section 11(1) of the I.T. Act. In fact, ground No. 2 preferred before the first appellate authority is the following : " 2. Without prejudice to our claim under section 11(2), the deduction under section 11(1) of Rs. 17,873 being 25% of Gross Income of the trust of Rs. 71,496 be allowed which the learned ADIT(E) has not allowed. " However, this alternative argument was not at all taken up for consideration and determined by the DC(A), B-Range, Bombay, in his impugned order. I hold that this argument is fully valid and the relief is to be granted. I, therefore, hold, partly allowing the appeal, that the sum of Rs. 17,873 should be al ..... X X X X Extracts X X X X X X X X Extracts X X X X
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